CHANGE IN CONTROL
SEPARATION AGREEMENT
AGREEMENT between DA CONSULTING, GROUP, INC., a Texas corporation (the
"Company"), and Xxxxxxx Xxxxxx ("Executive"),
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to retain certain key employee personnel and,
accordingly, the Board of Directors of the Company (the "Board") has approved
the Company entering into a separation agreement with Executive in order to
encourage Executive's continued service to the Company; and
WHEREAS, Executive is prepared to perform such services in return for
specific arrangements with respect to separation compensation and other
benefits;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:
1. DEFINITIONS.
-----------
(a) "CHANGE IN CONTROL" means (i) any merger, consolidation, or
reorganization in which the Company is not the surviving entity (or
survives only as a subsidiary of an entity), (ii) any sale, lease,
exchange, or other transfer of all or substantially all of the assets
of the Company to any other person or entity (in one transaction or a
series of related transactions), (iii) dissolution or liquidation of
the Company, (iv) as a result of or in connection with a contested
election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the
Board, or (v) any event that is reported by the Company under Item 1
of a Form 8-K filed with the Securities and Exchange Commission;
provided, however, that the term "Change in Control" shall not include
any reorganization, merger, consolidation, sale, lease, exchange, or
similar transaction involving solely the Company and one or more
previously wholly-owned subsidiaries of the Company unless such matter
is described in clause (v) above.
(b) "CHANGE IN DUTIES" shall mean the occurrence, on the date upon which a
Change in Control occurs or within two years thereafter, of any one or
more of the following:
(i) A significant reduction in the nature or scope of Executive's
authorities or duties from those applicable to Executive
immediately prior to the date on which a Change in Control
occurs;
(ii) A reduction in Executive's annual base salary or target
opportunity under any applicable bonus or incentive compensation
plan or arrangement from that provided to Executive immediately
prior to the date on which a Change in Control occurs;
(iii) A diminution in Executive's eligibility to participate in bonus,
stock option, incentive award and other compensation plans which
provide opportunities to receive compensation which are the
greater of (A) the opportunities pro-vided by the Company
(including its subsidiaries) for executives with comparable
duties or (B) the opportunities under any such plans under which
Executive was participating immediately prior to the date on
which a Change in Control occurs;
(iv) A diminution in employee benefits (including but not limited to
medical, dental, life insurance, and long--term disability plans)
and perquisites applicable to Executive from the greater of (A)
the employee benefits and perquisites provided by the Company
(including its subsidiaries) to executives with comparable duties
or (B) the employee benefits and perquisites to which Executive
was entitled immediately prior to the date on which a Change in
Control occurs; or
-1-
(v) A change in the location of Executive's principal place of
employment by the Company by more than 100 miles from the
location where Executive was principally employed immediately
prior to the date on which a Change in Control occurs.
(c) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(d) "COMPENSATION" shall mean the greater of:
(i) Executive's annual base salary at the rate in effect immediately
prior to the date on which a Change in Control occurs;
(ii) Executive's annual base salary at the rate in effect sixty days
prior to the date of Executive's Involuntary Termination; or
(iii) Executive's annual base salary at the rate in effect at the time
of Executive's Involuntary Termination.
(d) "INVOLUNTARY TERMINATION" shall mean any termination of Executive's
employment with the Company which:
(i) does not result from a resignation by Executive (other than a
resignation pursuant to clause (ii) of this subparagraph (d)); or
(ii) results from a resignation by Executive on or before the date
which is sixty days after the date upon which Executive receives
notice of a Change in Duties; provided, however, the term
"Involuntary Termination" shall not include a Termination for
Cause or any termination as a result of death, disability under
circumstances entitling Executive to benefits under the Company's
long-term disability plan, or Retirement.
(e) "RETIREMENT" shall mean Executive's resignation on or after the date
Executive reaches age sixty-five.
(f) "SEPARATION AMOUNT" shall mean pounds amount 117,000( one hundred and
seventeen thousand pounds )
(g) "TERMINATION FOR CAUSE" shall mean Executive (i) has engaged in gross
negligence or willful misconduct in the performance of Executive's
duties, (ii) has willfully refused without proper legal reason to
perform Executive's duties and responsibilities, (iii) has materially
breached any material provision of any agreement between the Company
and Executive, including without limitation paragraph 2 herein, (iv)
has materially breached any material corporate policy maintained and
established by the Company that is of general applicability to the
Company's executive employees, (v) has willfully engaged in conduct
that Executive knows or should know is materially injurious to the
Company or any of its affiliates, or (vi) has engaged in illegal
conduct or any act of serious dishonesty which adversely affects, or
reasonably could in the future adversely affect, the value,
reliability, or performance of Executive in a material manner;
provided, however, that in no event shall a termination of Executive's
employment constitute a "Termination for Cause" unless such
termination is approved by at least two-thirds of the members of the
Board after Executive has been given written notice by the Company of
the specific reason for such termination and an opportunity for
Executive, together with Executive's counsel, to be heard before the
Board. Members of the Board may participate in any hearing that is
required pursuant to this subparagraph (g) by means of conference
telephone or similar communications equipment by means of which all
persons participating in the hearing can hear and speak to each other;
provided, however, that at least one-half of the members of the Board
shall attend the hearing in person.
(h) "WELFARE BENEFIT PLANS" shall mean the medical, dental, life insurance,
accidental death and dismemberment, and long-term disability plans
provided by the Company to its active employees.
2. SERVICES. Executive agrees that Executive shall (a) render services to the
--------
Company (as well as any subsidiary thereof or successor thereto) during the
period of Executive's employment to the best of Executive's ability and in
a prudent and businesslike manner and (b) devote substantially the same
time, efforts, and dedication to Executive's duties as heretofore devoted.
-2-
3. SEPARATION BENEFITS. If Executive's employment by the Company or any
--------------------
successor thereto shall be subject to an Involuntary Termination that
occurs on the date upon which a Change in Control occurs or within two
years thereafter, then Executive shall be entitled to receive, as
additional compensation for ser-vices rendered to the Company (including
its subsidiaries), the following separation benefits:
(a) A lump sum cash payment in an amount equal to the Separation Amount,
which shall be paid to Executive on or before the thirty-first day
after the last day of Executive's employment with the Company.
(b) All of the outstanding stock options granted by the Company to
Executive shall become immediately exercisable in full upon
Executive's termination of employment and for a period of three months
thereafter or for such greater period as may be provided in the plan
or plans pursuant to which such stock options were granted (but in no
event shall any such stock option be exercisable after the expiration
of the original term of such stock option).
(c) A lump sum cash payment in an amount equal to the greater of (i) the
Company's cost of coverage for Executive and those of Executive's
dependents (including Executive's spouse) who were covered, under the
Welfare Benefit Plans on the day prior to Executive's Involuntary
Termination or (ii) the Company's cost of such coverage paid
immediately prior to the Change in Control, for a period of two years.
Nothing herein shall be deemed to adversely affect in any way the
rights of Executive and Executive's eligible dependents to health care
continuation coverage as required pursuant to Part 6 of Title I of the
Employee Retirement Income Security Act of 1974, as amended.
(d) Executive shall be entitled to receive out-placement services in
connection with obtaining new employment up to a maximum cost of
[pounds 10 .000 thousand ] (which shall be paid directly by the
Company to the provider of such services).
4. INTEREST ON LATE BENEFIT PAYMENTS. If any payment provided for in Paragraph
---------------------------------
3(a) hereof is not made when due, the Company shall pay to Executive
interest on the amount payable from the date that such payment should have
been made under such paragraph until such payment is made, which interest
shall be calculated at the rate of 1% per month (with a partial month
counting as a full month).
5. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. Notwithstanding anything to the
------------------------------------------
contrary in this Agreement, in the event that any payment or distribution
by the Company to or for the benefit of Executive, whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest or penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company
shall pay to Executive an additional payment (a "Gross-up Payment") in an
amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any
Excise Tax imposed on any Gross-up Payment, Executive retains an amount of
the Gross-up Payment equal to the Excise Tax imposed upon the Payments. The
Company and Executive shall make an initial determination as to whether a
Gross-up Payment is required and the amount of any such Gross-up Payment.
Executive shall notify the Company immediately in writing of any claim by
the Internal Revenue Service which, if successful, would require the
Company to make a Gross-up Payment (or a Gross-up Payment in excess of
that, if any, initially determined by the Company and Executive) within ten
days of the receipt of such claim. The Company shall notify Executive in
writing at least ten days prior to the due date of any response required
with respect to such claim if it plans to contest the claim. If the Company
decides to contest such claim, Executive shall cooperate fully with the
Company in such action; provided, however, the Company shall bear and pay
directly or indirectly all costs and expenses (including additional
interest and penalties) incurred in connection with such action and shall
indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of the Company's action. If, as a result of
the Company's action with respect to a claim, Executive receives a refund
of any amount paid by the Company with respect to such claim, Executive
-3-
shall promptly pay such refund to the Company. If the Company fails to
timely notify Executive whether it will contest such claim or the Company
determines not to contest such claim, then the Company shall immediately
pay to Executive the portion of such claim, if any, which it has not
previously paid to Executive.
6. GENERAL.
-------
(a) TERM. The effective date of this Agreement is September 30, 1999.
----
Within sixty days from and after the expiration of two years after
said effective date and within sixty days after each successive
two-year period of time there-after that this Agreement is in effect,
the Company shall have the right to review this Agreement, and in its
sole discretion either continue and extend this Agreement, terminate
this Agreement, or offer Executive a different agreement. The
Compensation Committee of the Board (excluding any member of such
committee who is covered by this Agreement or by a similar agreement
with the Company) will vote on whether to so extend, terminate, or
offer Executive a different agreement and will notify Executive of
such action within said sixty-day time period mentioned above. This
Agreement shall remain in effect until so terminated or modified by
the Company. Failure of the Compensation Committee of the Board to
take any action within said sixty days shall be considered as an
extension of this Agreement for an additional two-year period of time.
Notwithstanding anything to the contrary contained in this "sunset
provision," it is agreed that if a Change in Control occurs while this
Agreement is in effect, then this Agreement shall not be subject to
termination or modification under this "sunset provision," and shall
remain in force for a period of two years after such Change in
Control, and if within said two years the contingency factors occur
which would entitle Executive to the benefits as provided herein, this
Agreement shall remain in effect in accordance with its terms. If,
within such two years after a Change in Control, the contingency
factors that would entitle Executive to said benefits do not occur,
thereupon this two-year "sunset provision" shall again be applicable
with the sixty-day time period for action by the Compensation
Committee of the Board to thereafter commence at the expiration of
said two years after such Change in Control and on each two-year
anniversary date thereafter.
(b) INDEMNIFICATION. If Executive shall obtain any money judgment or
---------------
otherwise prevail with respect to any litigation brought by Executive
or the Company to enforce or interpret any provision contained herein,
the Company, to the fullest extent permitted by applicable law, hereby
indemnifies Executive for Executive's reasonable attorneys' fees and
disbursements incurred in such litigation and hereby agrees (i) to pay
in full all such fees and disbursements and (ii) to pay prejudgment
interest on any money judgment obtained by Executive from the earliest
date that payment to Executive should have been made under this
Agreement until such judgment shall have been paid in full, which
interest shall be calculated at the rate of 1% per month (with a
partial month counting as a full month).
(c) PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to pay (or
----------------------------
cause one of its subsidiaries to pay) Executive the amounts and to
make the arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counter-claim, recoupment,
defense or other right which the Company (including its subsidiaries)
may have against Executive or anyone else. All amounts payable by the
Company (including its subsidiaries hereunder) shall be paid without
notice or demand. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made
under any provision of this Agreement, and, except as provided in
Paragraph 3(c) hereof, the obtaining of any such other employment
shall in no event effect any reduction of the Company's obligations to
make (or cause to be made) the payments and arrangements required to
be made under this Agreement.
-4-
(d) SUCCESSORS. This Agreement shall be binding upon and inure to the
----------
benefit of the Company and any successor of the Company, by merger or
other-wise. This Agreement shall also be binding upon and inure to the
benefit of Executive and Executive's estate. If Executive shall die
prior to full payment of amounts due pursuant to this Agreement, such
amounts shall be payable pursuant to the terms of this Agreement to
Executive's estate.
(e) SEVERABILITY. Any provision in this Agreement which is prohibited or
------------
unenforceable in any jurisdiction by reason of applicable law shall,
as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(f) NON-ALIENATION. Executive shall not have any right to pledge,
--------------
hypothecate, anticipate or assign this Agreement or the rights
hereunder, except by will or the laws of descent and distribution.
(g) NOTICES. Any notices or other communications pro-vided for in this
-------
Agreement shall be sufficient if in writing. In the case of Executive,
such notices or communications shall be effectively delivered if hand
delivered to Executive at Executive's principal place of employment or
if sent by registered or certified mail to Executive at the last
address Executive has filed with the Company. In the case of the
Company, such notices or communications shall be effectively delivered
if sent by registered or certified mail to the Company at its
principal executive offices.
(h) CONTROLLING LAW. This Agreement shall be governed by, and construed in
---------------
accordance with, the laws of the State of Texas without regard to
conflict of law.
(i) FULL SETTLEMENT; WITHHOLDING. If Executive is entitled to and receives
----------------------------
the benefits provided hereunder, performance of the obligations of the
Company hereunder will constitute full settlement of all claims that
Executive might otherwise assert against the Company on account of
Executive's termination of employment. Any separation benefits paid
pursuant to this Agreement shall be deemed to be a separation payment
and not "Compensation" for purposes of determining benefits under the
Company's qualified plans (unless and to the extent that any such
qualified plan expressly provides otherwise), and shall be subject to
any required tax withholding.
(j) UNFUNDED OBLIGATION. The obligation to pay amounts under this
--------------------
Agreement is an unfunded obligation of the Company (including its
subsidiaries), and no such obligation shall create a trust or be
deemed to be secured by any pledge or encumbrance on any property of
the Company (including its subsidiaries).
(k) NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be deemed to
-------------------------------
constitute a contract of employment, nor shall any provision hereof
affect (i) the right of the Company (or its subsidiaries) to discharge
Executive at will or (ii) the terms and conditions of any other
agreement between the Company and Executive except as provided herein.
(l) NUMBER AND GENDER. Wherever appropriate herein, words used in the
-------------------
singular shall include the plural and the plural shall include the
singular. The masculine gender where appearing herein shall be deemed
to include the feminine gender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the _10 ___ day of _April _______________, 2000.
"EXECUTIVE"
Xxxxxxx Wright_______________________________
"COMPANY"
DA CONSULTING GROUP, INC.
BY: ____________________________________
NAME:_______________________________
TITLE: ___________________________
-5-
